Under-pressure Huawei has decided to sell its Honor budget smartphone unit in order to save the brand.
The Chinese telecommunications giant yesterday issued a statement saying Huawei's consumer business has been under tremendous pressure as of late.
According to the company, this is due to a persistent unavailability of technical elements needed for its mobile phone business.
Huawei Investment and Holding Company has thus decided to sell all of its Honor business assets to Shenzhen Zhixin New Information Technology, it says.
The embattled telecommunications firm has been facing pressure following restrictions imposed by the US, after the US Department of Commerce put Huawei on an export blacklist, citing “national security threats” due to its close ties to the Chinese government.
However, Huawei has vehemently denied these allegations
Huawei, which expects little change in the sanctions under the newly-elected Joseph Biden-led US government, will now focus only on high-end handsets and its corporate-oriented business.
In its statement, Huawei says this sale will help Honor's channel sellers and suppliers make it through this difficult time.
“Once the sale is complete, Huawei will not hold any shares or be involved in any business management or decision-making activities in the new Honor company.
“This move has been made by Honor's industry chain to ensure its own survival. Over 30 agents and dealers of the Honor brand first proposed this acquisition,” Huawei says.
Since its creation in 2013, it notes, the Honor brand has focused on the youth market by offering phones in the low- to mid-end price range.
During these past seven years, it adds, Honor has developed into a smartphone brand that ships over 70 million units annually.
“Huawei highly appreciates the continued dedication, attention and support given by Honor's consumers, channel sellers, suppliers, partners and employees.
“We hope this new Honor company will embark on a new road of honour with its shareholders, partners and employees. We look forward to seeing Honor continue to create value for consumers and build a new intelligent world for young people.”
Honor launched in the South African market in 2018, and has since released a range of phones after partnering with online shopping platform Takealot for the sale of its devices.
At the time of its local launch, Honor said Africa will play an important role in changing Honor's revenue split, which was projected to consist of 50% of sales made within China and another 50% of the rest of the markets across the world by 2020.